BRITAIN AND COMMONWEALTH TRADE

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To ask Her Majesty's Government whether in the interest of Commonwealth trade expansion they are willing to initiate some amendment to the GATT "No new preference" rule and to the freezing of existing preferences at present levels, thus making possible negotiation of mutually advantageous bilateral agreements between Britain and Commonwealth Governments.]

No, my Lords. When the question of amending the General Agreement on Tariffs and Trade to allow the creation of new preferences has been considered by Commonwealth Governments, as it was at the Commonwealth Conference of 1952, there has been general agreement that it would be neither desirable nor feasible to seek to revise the present rule. The Montreal Conference in 1958, while affirming that the preferential system should be continued, declared that the Commonwealth would continue to work in no exclusive spirit towards a multilateral trade and payments system over the widest possible area.

Apart from the difficulty of persuading countries outside the Commonwealth to accept an extension of the preferential system, it would have difficult implications. As nearly all imports from the Commonwealth enter Britain duty free, we could not increase the preferences which they enjoy on those duty-free goods without imposing or raising duties
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on imports of raw materials and foodstuffs from foreign countries. Conversely, Commonwealth countries could increase their preferences for British goods only by raising the duties they charge on imports from foreign countries or reducing the protection afforded to their own industries. We have had useful bilateral agreements with a number of Commonwealth countries for many years. In the Government's view there are many ways of expanding Commonwealth trade to our mutual advantage within the GATT rules, and the meeting of Commonwealth Trade Ministers which it is proposed to hold before the GATT session in May will provide an opportunity for discussion of these matters.

My Lords, while thanking the Minister for his comprehensive reply, may I ask him two questions? Is it not a fact that, at the Conferences the Minister has mentioned, Her Majesty's Government gave no lead in any proposed amendment of GATT, and is it not a fact that the views he has expressed were not unanimous views of the various members? Secondly, is not the Minister's reply in effect a clear declaration, in spite of brave words spoken, that Her Majesty's Government take the view that no special measures can be taken to stimulate Commonwealth trade, such as increased preferences, but that it must be left to expand as part of the growth of world multilateral trade?

My Lords, I think my noble friend is under something of a misapprehension. Other Commonwealth countries have shown no enthusiasm at all for increasing the margins of preference. In 1947, Canada, for example, secured her release from guarantees of certain margins of preference in her bilateral trade agreement with the United Kingdom. In 1957 and 1959 respectively Australia and New Zealand renegotiated their bilateral trade agreements with the United Kingdom and secured the right to reduce substantially existing margins of preference on our goods. My noble friend said there was no unanimous opinion. In my view there was a unanimous opinion that they did not want the present margins extended, and Her Majesty's Government feel that there are many other ways of stimulating Commonwealth trade and,
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in particular, that if we can get worldwide agreements, Commonwealth trade will be extensively helped.

My Lords, may I ask the Minister two questions? First of all, as regards unanimity—I am not disagreeing with a good deal of what he said—was it not the fact that, in 1951, at the Commonwealth Conference I myself, on behalf of the British Government, proposed that GATT should be reopened and preference should be extended, and that there was only one Commonwealth country who would lend any support to that proposition? I think perhaps it is fair to have that on the Record. But may I ask the Minister this? While I would not dissent from his statement that you could not reopen the whole question of Imperial preference—doubtless you would not get much support if you tried to do so—what would be the position in a general round in which we were trying to look forward if a large number of countries, Commonwealth and others, were anxious to make a trade arrangement which would facilitate trade between them, but a number of other countries—I can think of one in particular—relying upon GATT, said, "No. We are going to have a veto upon that"? Could we make an agreement with all the consenting countries, or should we be prevented by GATT? If we found we were prevented by GATT, then ought we not to try to get GATT amended or to take steps, joining with all these other countries, to say, "All right, we will have a new GATT". Is that not possible?

My Lords, I am grateful to my noble friend for telling me about his initiative in 1951. I was not actually aware of it, and, of course, it bears out what I have been saying. I think I might at this stage say to my noble friend that the further question which he has asked, although we will take very careful note of what it implies, is far beyond the Question on the Order Paper.

My Lords, in view of the disturbing trends of Commonwealth trade, may I ask the noble Lord this question? The Minister will correct me if I am wrong, but I think that for the first time there was a deficit in trade between this country
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and the Commonwealth for the first six months of this year, to the tune of £29 million. In view of the changed circumstances, the fact that this country cannot enter the Common Market, would the noble Lord ensure that the Commonwealth countries, not only the Governments but the trading organisations and those in this country, have a clear understanding of the proposals the Government have for the expansion of Commonwealth trade?

My Lords, the expansion of Commonwealth trade is reviewed from time to time—one might almost say continuously—not necessarily at ministerial level, though sometimes at ministerial level. I would again remind the noble Lord of what I said: that there is to be a GATT meeting in May and that shortly before that the Commonwealth Trade Ministers will be meeting, when these points will be discussed. I do not think I can anticipate how those discussions will go.

But the Minister has said that the Government have ideas about how Commonwealth trade can be extended. Would he not agree that in the present circumstances it would be very beneficial to the Commonwealth, and also for the people of this country, if we knew what the Government's proposals were?

My Lords, while welcoming the Free Trade disposition of the Minister as shown by him to-day, may I ask him whether it is not a fact that most Commonwealth countries are now trying to develop their trade outside the Commonwealth, and for this reason is it not sensible that we should try to extend world-wide trade, rather than trade between this country and the other countries of the Commonwealth?

My Lords, I think that is what I have already said, and I entirely agree with the noble Lord. It will be much better if we can get worldwide trade expanded; and this is, of course, the line on which we are going at the present time.

My Lords, if this is so, how does the Minister expect that we shall be able adequately to maintain inside the Commonwealth all the other beneficial relationships which have been built up for a couple of centuries with those on whom alone perhaps in the world we can safely rely to come to our assistance?

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To ask Her Majesty's Government whether their trade policy permits acceptance of Commonwealth agricultural primary products and citrus fruits on long-term quantity agreements in return for compensating advantages to British manufactures exported to those territories.]

My Lords, Her Majesty's Government attach great importance to expanding trade with Commonwealth countries. I do not know if noble Lords opposite object to that statement. Her Majesty's Government have no objection in principle to long-term quantity agreements provided that they are commercially advantageous. But world-wide agreements about international trade and primary products, if they can be achieved, will be of greater benefit to the Commonwealth than arrangements on a narrower scale. As I have already mentioned to the noble Lord, the Commonwealth countries have themselves declared their intention of working for a multilateral trade system. We, for our part, are prepared to take part in international discussions of these matters provided that the proposals are fair alike to producers and consumers.

My Lords, is the Minister aware that I had in mind the West Indies in this
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particular case? And when he says—and I think I remember his words—"commercially advantageous" does he mean commercially advantageous to Britain alone or to Britain and her partners: that is to say, the West Indies?

My Lords, I imagine that my noble friend is referring to citrus in the West Indies. He will remember that in his Question he did mention "compensating advantages". Perhaps I may expand my answer on the citrus position in the West Indies. Imports of grapefruit and citrus products into Britain from the British West Indies are protected by the quantitive restrictions imposed on imports from dollar sources, particularly from the United States. These quantitive restrictions are imposed contrary to our international obligations under GATT and we have said that we hope to remove them eventually. It would be difficult to enter into long-term agreements to import citrus from the West Indies in quantities attractive to the producers without being obliged, in effect, to continue throughout the term of the agreement these quantitive agreements, which, as I say, are really outside the terms of GATT now. It is not easy to see—and this refers to the Question on the Order Paper—what compensatory advantages for our exports could be offered by the West Indies, who already give them preference.

My Lords, may I thank my noble friend for his replies and inform him that I am afraid that they are profoundly disappointing to a large number of people, not least the section of the Party to which he and I belong?